Quantcast

Jewish Journal

JewishJournal.com

August 12, 2009

Madoff aide testifies: ‘It was all fake’

http://www.jewishjournal.com/blog/item/madoff_aide_testifies_it_was_all_fake_20090812/

Nine months after we learned about Bernard Madoff’s mammoth investment fraud, one of his closest aides, Frank DiPascali, pleaded guilty yesterday to helping Madoff pull off the $65-billion Ponzi scheme:

Mr. DiPascali described how he, Mr. Madoff and unidentified “other people” created fake account statements, shuffled money between bank accounts and perpetuated a years-long fairy tale that they were making money for clients of Bernard L. Madoff Investment Securities.

“No purchases or sales of securities were actually taking place in their accounts,” Mr. DiPascali said. “It was all fake. It was all fictitious. It was wrong, and I knew it was wrong at the time.”

And, from his account, keeping the scheme afloat and investors and regulators duped was a full-time job. To give the appearance that Mr. Madoff’s firm had mastered the markets, Mr. Madoff and his employees would track stock prices and then simply pretend to buy stocks whose trajectories matched the firm’s investment goals, Mr. DiPascali said.

They created and mailed out reams of account statements and trading slips for trades that had never taken place. Prosecutors said that the ruse extended as far as designing a fake computer stock-trading platform and using a random-number generator to assign times and amounts to trade records, so that no one would detect any pattern.

Equally intriguing details emerged in a civil lawsuit filed against Mr. DiPascali on Tuesday by the Securities and Exchange Commission, with which Mr. DiPascali has also agreed to cooperate.

For the first time, that complaint suggested that Mr. Madoff may have started his money-management business as a legitimate operation, investing money mostly for friends and family using arbitrage and stock-picking strategies.

But “at least as early as the 1980s,” the S.E.C. asserted, Mr. DiPascali was helping Mr. Madoff create fictitious trades to generate phantom returns for particular accounts — specifically, accounts set up by some early feeder funds, which steered money from other investors into Mr. Madoff’s hands.

Read the rest here.

JewishJournal.com is produced by TRIBE Media Corp., a non-profit media company whose mission is to inform, connect and enlighten community
through independent journalism. TRIBE Media produces the 150,000-reader print weekly Jewish Journal in Los Angeles – the largest Jewish print
weekly in the West – and the monthly glossy Tribe magazine (TribeJournal.com). Please support us by clicking here.

© Copyright 2014 Tribe Media Corp.
All rights reserved. JewishJournal.com is hosted by Nexcess.net
Web Design & Development by Hop Studios 0.2845 / 49